Intel 17-qubit quantum test chip.
Stefan Thomas could really use a quantum computer this year.
A programmer and crypto trader of German origin forgot the password to unlock his digital wallet, which contains 7,002 bitcoins, which is now worth $ 265 million. Quantum computers, which will be several million times faster than traditional computers, could easily help him break code.
While quantum computing is still in its infancy, governments and private sector companies like Microsoft and Google are working to make it a reality. Within a decade, quantum computers could become powerful enough to crack cryptographic security that protects cell phones, bank accounts, email addresses, and – yes – bitcoin wallets.
“If you had a quantum computer today and were a government sponsor – for example, China – chances are, in about eight years, you could hack blockchain wallets,” said Fred Thiel, CEO of Marathon Digital Holdings, which specializes in mining. cryptocurrencies.
This is why cryptographers around the world are striving to create a quantum-resistant encryption protocol.
Right now, much of the world runs on what’s called asymmetric cryptography, in which people use a pair of private and public keys to access things like email and crypto wallets.
“Every financial institution, every login on your phone — it’s all based on asymmetric cryptography, which is vulnerable to being hacked by a quantum computer,” Thiel said. Thiel is a former CEO of Utimaco, one of the largest cryptographic companies in Europe that has worked with Microsoft, Google and others on post-quantum encryption.
A public / private key pair allows users to create a digital signature using their private key, which can be verified by anyone with the corresponding public key.
In the case of cryptocurrencies such as bitcoin, this digital signature is called the elliptic curve digital signature algorithm and ensures that bitcoin can only be spent by the rightful owner.
In theory, someone using quantum computing could reverse engineer your private key, forge your digital signature, and subsequently clear your bitcoin wallet.
“If I were dealing with fanning fear … I would tell you that among the first types of digital signatures to be broken by quantum computers are elliptical curves as we use them today for Bitcoin wallets.” said Torsten Gretker. , former CTO of Utimaco and one of the leading experts in the field of quantum computing.
“But this will happen if we do nothing,” he said.
Strengthening Bitcoin wallets
Cryptocurrency experts told CNBC that they are not worried about the quantum hacking of bitcoin wallets for several reasons.
Castle Island Ventures founding partner Nick Carter noted that quantum shifts will be gradual, not sudden.
“We would have a lot of warnings if quantum computing reached a stage of maturity and complexity, where it began to threaten our core cryptographic primitives,” he said. “It won’t happen overnight.”
There is also the fact that the community is aware of its coming and researchers are already in the process of creating quantum secure cryptography.
“The National Institute of Science and Technology (NIST) is working on a new encryption standard for the future that provides quantum security,” Thiel said.
NIST is currently conducting this selection process by selecting the best candidates and standardizing them.
“This is a technical problem and there is a technical solution for it,” Gretker said. “There are new and secure algorithms for digital signatures … You will have years to transfer your funds from one account to another.”
Gretker said he expects the first standard quantum secure cryptographic algorithm to arrive by 2024, which he says is long before we see a quantum computer capable of breaking bitcoin cryptography.
As soon as a new standardized post-quantum secure cryptography is created, the process of mass migration will begin, Grötker said. “Anyone who owns Bitcoin or Ethereum will transfer [their] funds from digital identity, which is protected by the old type of key, to a new wallet or a new account, protected by a new type of key, which will be secure, ”he said.
However, this security enhancement requires users to be active. In some scenarios where fiat money accounts are centralized through a bank, this process may be easier than requiring a decentralized network of cryptocurrency holders to individually update their systems.
“Not everyone, no matter how long it takes, will transfer their funds on time,” Gretker said. There will inevitably be users who forget their password or who may have passed away without sharing their key.
“There will be a number of wallets … which will become increasingly insecure because they use weaker keys.”
But there are ways to deal with such errors in security updates. For example, an organization can block all accounts that are still using the old type of cryptography and give the owners some kind of access to it. The trade-off here will be the loss of anonymity when users go to get their balance back.